Washington Mutual confident it's on right path
Like the rest of Washington Mutual's top brass, Steve Rotella wants to talk about the company's future, not the bumpy year that preceded...
Seattle Times business reporter
Like the rest of Washington Mutual's top brass, Steve Rotella wants to talk about the company's future, not the bumpy year that preceded his arrival in January.
"I wasn't here then, so I'd rather talk about what we're doing now," the thrift's new president and chief operating officer said in an interview yesterday.
Rotella, former head of J.P. Morgan Chase's residential-lending business, was referring to WaMu's mortgage business, which ran into trouble last year and contributed to a steep decline in 2004 earnings.
He sounded much like his new boss, longtime Chief Executive Kerry Killinger, who earlier in the day told investors and employees at the company's annual meeting that WaMu addresses its problems but "we do not dwell on those challenges."
Both men pointed to first-quarter results as evidence the company is on the right path.
The profit of $902 million, or $1.01 a share, beat Thomson First Call's analyst consensus of 82 cents a share. Profit was down from $1.05 billion a year ago, but the earlier figure included $399 million from the sale of Washington Mutual Finance.
"We are in the infancy of what we are going to be able to accomplish with this company," Killinger said at the meeting.
Since arriving, Rotella said, he has spoken to Killinger almost daily. Rotella is charged with carrying out the day-to-day operations of WaMu's strategy.
"We're working together famously," Rotella said. And all the ideas do not come from on high, he added.
WaMu's people-oriented culture is one reason he moved from his native New York to work for the thrift. "It's extremely respectful and fair," he said.
The more relaxed dress code for executives at WaMu came as a welcome change for Rotella, who said yesterday marked perhaps the fourth time he had to wear a suit and tie for his new job.
On the detail front, Rotella thinks WaMu's mortgage business needs to speed up processing of customer applications. He also thinks WaMu could do much more with small-business customers, and that its Web site could be more sales-oriented.
"Only 20 percent of our online customers use online bill-pay. It's a huge opportunity for us," Rotella said.
When it comes to the bigger picture — how WaMu is cutting costs and whether its thriving retail branches will continue to prosper — Rotella again answered with details.
WaMu's strategy calls for lowering its efficiency ratio, which measures costs as a percentage of revenue, to a lean 50 percent or lower over the next five years. In the first quarter, the ratio was 55.8 percent, down from 63.3 percent a year ago.
Rotella said progress on efficiency comes with "a day-to-day, constant search for improvements. I don't think there are any big-bang improvements."
The company is working to streamline its technology and cut costs wherever possible.
"We need to monitor and measure ourselves, make sure due dates are met and that we're on budget," Rotella said.
As for the retail-banking operation, whose heralded leader, Deanna Oppenheimer, stepped down after Rotella arrived, he pointed to its strong first quarter.
Profit for that segment was $538 million, up 26 percent from $427 million a year earlier.
"What's been done in the past is a tremendous base," Rotella said. "Morale in that part of the business is very high."
And customers like what they get from WaMu's retail branches, said Rotella.
He emphasized that point during the annual meeting with a two-minute video of a customer in New York. He said the woman approached the company's film crew asking to say a few words about her experiences.
"It's almost like Disneyland, the people are so friendly," the customer gushed on camera.
Melissa Allison: 206-464-3312 or email@example.com